Financial Breakeven
Shane’s Toys Inc. just purchased a $325,000 machine to produce toy cars. The machine will be fully depreciated by the straight-line method over its five-year economic life. Each toy sells for $32. The variable cost per toy is $11, and the firm incurs fixed costs of $385,000 each year. The corporate tax rate for the company is 35 percent. The appropriate discount rate is 10 percent. What is the financial break-even point for the project?
Financial Breakeven